This Week's News Proves: AI Is Where It's At

Micron’s MU quarterly results earlier this week helped confirm the ramping of AI demand, and we see AI touching several of our investment themes in one way or another. 

In fact, AI is still a major investing theme as we look back at the information we've gathered so far. This is true specifically for the technology, as well as for the needed digital infrastructure, and related energy pain points, cybersecurity and beyond. We view the volume of AI-related news as key as we're seeing a wider spread of adoption across multiple sectors. We still see the movement as the first wave of adoption and related to productivity-based services and products, which keep us bullish on Microsoft MSFT and ServiceNow NOW shares.

Let’s look at what we've found so far this week:

Artificial Intelligence

“New research from IDC entitled, The Global Impact of Artificial Intelligence on the Economy and Jobs, predicts that business spending to adopt artificial intelligence (AI), to use AI in existing business operations, and to deliver better products/services to business and consumer customers will have a cumulative global economic impact of $19.9 trillion through 2030 and drive 3.5% of global GDP in 2030.” Read more from the Fierce Network.

“LinkedIn user data is being used to train artificial intelligence models, leading some social media users to call out the company for opting members in without consent. The professional networking platform said on its website that when users log on, data is collected for details such as their posts and articles, how frequently they use LinkedIn, language preferences and any feedback users have sent to the company.” Read more from USA Today.

Portfolio positions: Marvell MRVL, Microsoft, Nvidia NVDA, ServiceNow NOW

Artificial Intelligence, Cybersecurity

“In an email campaign targeting French users, researchers discovered malicious code believed to have been created with the help of generative artificial intelligence services to deliver the AsyncRAT malware. While cybercriminals have used generative AI technology to create convincing emails, government agencies have warned about the potential abuse of AI tools to creating malicious software, despite the safeguards and restrictions that vendors implemented.” Read more from bleepingcomputer.com.

Portfolio positions: First Trust Nasdaq Cybersecurity ETF CIBR,

Artificial Intelligence, Digital Infrastructure

“As artificial intelligence (AI) continues to be integrated into everything, everywhere, 5G networks are starting to feel the strain—particularly when it comes to uplink traffic. A recent analyst forecast tipped uplink traffic to increase significantly in the coming years. And shifting traffic patterns mean mobile networks must adapt to avoid future bottlenecks.” Read more from Fierce Network.

Portfolio positions: Marvell

Artificial Intelligence, Digital Infrastructure, Energy Pain Point

“IDC expects the surging demand for AI workloads will lead to a significant increase in datacenter capacity, energy consumption, and carbon emissions, with AI datacenter capacity projected to have a compound annual growth rate(CAGR) of 40.5% through 2027. Accordingly, AI datacenter energy consumption is forecast to grow at a CAGR of 44.7%, reaching 146.2 Terawatt hours (TWh) by 2027 with AI workloads consuming a growing portion of total datacenter electricity use. Overall, IDC expects global datacenter electricity consumption to more than double between 2023 and 2028 with a five-year CAGR of 19.5% and reaching 857 Terawatt hours (TWh) in 2028.” Read more here

“Pennsylvania’s dormant Three Mile Island nuclear plant would be brought back to life to feed the voracious energy needs of Microsoft under an unprecedented deal announced Friday in which the tech giant would buy 100 percent of its power for 20 years.” Read more from IDC.com.

Portfolio positions: Eaton ETN, Marvell, Nvidia

Artificial Intelligence, Safety & Security

“The survey data indicated that public safety usage of AI or smart solutions is far from achieving critical mass, with only a small percentage (14%) of public safety agencies reporting using AI or smart solutions today. There is, however, growing excitement on the role these technologies will play in shaping the future of the industry. In fact, 75% of respondents believe that AI and smart solutions will be important or even a top priority in the future.” Read more from Fierce Network.

Portfolio positions: Axon AXON, ServiceNow

Cybersecurity

“On Sept. 12, a law firm announced that Lehigh had agreed to pay $65 million to settle the case. As hackers penetrate American health-care firms with alarming regularity, the episode reveals how cyberthieves are exploiting uniquely sensitive data — with devastating human and financial consequences. Data breaches that compromise health information of hundreds of Americans happen on a near-daily basis…” Read more from the Washington Posth.

“Hackers linked to the Chinese government have broken into a handful of U.S. internet-service providers in recent months in pursuit of sensitive information, according to people familiar with the matter. The hacking campaign, called Salt Typhoon by investigators, hasn’t previously been publicly disclosed and is the latest in a series of incursions that U.S. investigators have linked to China in recent years.” Read more from the Wall Street Journal.

Portfolio positions: First Trust Nasdaq Cybersecurity ETF CIBR

Cash-Strapped Consumer, Digital Lifestyle

“Adobe Analytics projects U.S. online sales during the holiday period to grow 8.4%. That would have online holiday sales reaching $240.8 billion, up from $221.8 billion in the 2023 holiday shopping season. And of that, Adobe forecasts a record $128.1 billion spent through mobile devices. That mobile ecommerce spending would represent 12.8% year-over-year growth. Adobe sees 53.2% of online sales coming from mobile devices during the 2024 holiday season — compared to 51.1% in 2023. Adobe also anticipates the increase in mobile spending will correlate with an increase in buy now, pay later (BNPL) usage this holiday season.” Read more from digitalcommerce360.com.

Portfolio positions: Amazon AMZN, Costco COST

Digital Infrastructure

“The U.K. last week became the latest to designate data centers as critical infrastructure. Germany also regulates IT as key infrastructure as does the European Union through The NIS Directive and Digital Operational Resilience Act (DORA). DORA is focused on the financial sector but includes provisions for managing third party ICT risks. The U.S. also classifies data centers as critical infrastructure per a National Security Memorandum signed by President Joe Biden in April…” Read more from Fierce Network.

“The global market for Mobile Data Traffic is estimated at 109 Million Terabytes per Month in 2023 and is projected to reach 603 Million Terabytes per Month by 2030, growing at a CAGR of 27.6% from 2023 to 2030.” Read more at Yahoo Finance. 

Portfolio positions: Marvell, Nvidia

Digital Infrastructure, Safety & Security

“The Department of Defense’s Future Generation Wireless Technology Office is preparing DOD for its transition to the next generation of wireless telecommunications, called 6G, and one of its top priorities is advancing centralized unit, distributed unit… The FutureG office is looking at how the military could advance 6G for sensing and monitoring initiatives like the Integrated Sensing and Communications project, or ISAC.” Read more at executivegov.com. 

Portfolio positions: Lockheed Martin LMT, Marvell, Qualcomm QCOM.

Digital Lifestyle

“YouTube confirms advertisers can broadly target your paused screentime: 'As we’ve seen both strong advertiser and strong viewer response, we’ve since widely rolled out Pause ads to all advertisers… YouTube follows Hulu and AT&T in selling pause ads; Sling TV also just introduced pause ads in July…'” Read more at The Verge. 

Portfolio positions: Alphabet GOOGL, Trade Desk TTD